The EUR/USD and other euro crosses remains pressured by growing signs of a slowdown in the Eurozone economy. While it did look from time to time last year that the EUR/USD was going to take off from here, a rally never really materialised, in part because the ECB refused to succumb to pressure and tighten its belt like the Fed. Despite the ECB suggesting otherwise, an interest rate increase in Q3 looks increasingly unlikely now given the recent fundamental developments — or lack thereof — with the Brexit situation still unresolved and the Eurozone economy ailing.

German economy narrowly avoids technical recession

Thanks to consistently weak data from Germany, this morning we found out the economy was at a standstill in the fourth quarter of last year. Zero growth means the economy has narrowly avoided a technical recession of two consecutive quarters of falling output, after its GDP had contracted 0.2% in the third quarter. Once again, though, the data disappointed forecasts for a meagre 0.1% growth in Q4. Weak external demand for German cars and other manufactured goods, from places such as China, has held back growth.

With the Eurozone's largest economy struggling, GDP for the single currency bloc as a whole was never going to beat. Indeed, as expected, Eurozone GDP ‘expanded' by 0.2% quarter-on-quarter in Q4, meaning that output grew by a meagre 1.2% on a year-over-year basis, down from 1.3% recorded in 2017.

US retail sales up next

Looking ahead, we have potentially market-moving data from the US to look forward to in the afternoon: Retail Sales and Producer Price Index (PPI) measure of inflation. Headline retail sales are expected to have risen by 0.1% m/m in January with core sales expected to have remained flat on the month. PPI is seen rising 0.1% on the headline front and 0.2% on the core front.

We will have more US data on Friday, including Empire State Manufacturing Index, Industrial Production and Consumer Sentiment. From the Eurozone, the next set of important data is released next Thursday: the latest PMI numbers from the bloc's manufacturing and services sectors.

EUR/USD on the brink of a breakdown

With the dollar remaining supported across the board, the EUR/USD could break decisively lower after spending the best part of the last 6 months or so trying to form a base around long-term support circa 1.1300. If support was strong here, surely we should have seen a rally by now. The lack of a rally suggests the pressure is growing for a potential breakdown, with lots of liquidity resting below the November low of 1.1215 which could potentially be tripped in the coming days. That being said, the short term technical bias would flip back to the bullish side within the existing longer term range-bound configuration, should price break above this week's high of 1.1340. But for the bulls to re-emerge in a meaningful way, we do need to see price now make a distinct higher high.

Figure 1:


Risk Warning Notice Foreign Exchange and CFD trading are high risk and not suitable for everyone. You should carefully consider your investment objectives, level of experience and risk appetite before making a decision to trade with us. Most importantly, do not invest money you cannot afford to lose. There is considerable exposure to risk in any off-exchange transaction, including, but not limited to, leverage, creditworthiness, limited regulatory protection and market volatility that may substantially affect the price, or liquidity of the markets that you are trading. Margin and leverage To open a leveraged CFD or forex trade you will need to deposit money with us as margin. Margin is typically a relatively small proportion of the overall contract value. For example a contract trading on leverage of 100:1 will require margin of just 1% of the contract value. This means that a small price movement in the underlying will result in large movement in the value of your trade – this can work in your favour, or result in substantial losses. Your may lose your initial deposit and be required to deposit additional margin in order to maintain your position. If you fail to meet any margin requirement your position will be liquidated and you will be responsible for any resulting losses.

Feed news

Latest Forex Analysis

Editors’ Picks

EUR/USD: it's all about the Fed

The greenback closed the week on a high note, as data released Friday topped the market's consensus, suggesting that the US economy remains in good shape, and therefore the US Federal Reserve won't need to take a dovish turn.


GBP/USD recovers to 1.2600 as UK politics become clearer

While overall US Dollar (USD) strength continues to dominate market sentiment, the GBP/USD pair recovers to near 1.2600 as an outcome of the UK PM’s race becomes clearer during early Monday.


USD/JPY: Tokyo open welcomes risk-on amid quiet trading

The USD/JPY pair trades little positive to 108.60 by the time Tokyo markets open on Monday. Lack of major negative news triggered a market move against the US Dollar.


Top 3 Price Prediction Bitcoin, Ripple, Ethereum: Alone in the dark of outer space...heading to the Moon

It is almost usual practice of the Crypto market that technical extremes occur at the end of the working week – setting the stage for action over the weekend.

Read more

Gold surges through $1350 level, highest since April 2018

Gold caught some aggressive bids in the last hour and surged to the highest level since April 2018, around the $1358 region.

Gold News